A new twist in LAX concessions battle
The bidding process for new food and retail shops at Los Angeles International Airport took another turn Tuesday when lawyers for City Atty. Carmen Trutanich advised that if any contracts were awarded to HMS Host and SSP America a judge would probably invalidate them because of conflicts of interest.
SSP was recommended earlier this year by airport staff for the most lucrative food and beverage contract, which could be worth more than $56 million a year in sales.
HMS Host, a provider of concessions at LAX for more than 40 years, was not recommended for that contract or any of the seven others it competed for. The company subsequently lodged bid protests that Trutanich was asked to review.
The city attorney’s conclusions could further delay the overhaul of airport concessions and throws into question the most valuable food and beverage contract at LAX, where officials have been working to improve concessions for more than two years.
In a 17-page analysis, a Trutanich deputy says SSP’s conflict arises from its business relationship with Smart Design Group, a consultant hired by LAX operator Los Angeles World Airports.
According to the review, HMS Host has a conflict because of its relationship with California Pizza Kitchen, whose board of directors includes airport Commissioner Alan Rothenberg.
The city attorney also concluded that there might be an undetermined risk of awarding a separate food and beverage contract to THS-Marbella Food Service Partnership, which involves Delaware North, another longtime airport concessionaire that has also worked with Smart Design.
The contracts in question are now being considered by the city’s Board of Referred Powers, a City Council panel set up to make decisions when city boards or commissions are deemed to have conflicts of interests.
In the report, a copy of which was obtained by The Times, Chief Assistant City Atty. Pedro Echeverria said the panel would face little or no risk in awarding the three retail contracts before it. Furthermore, he said three of the five food and beverage contracts under review could be approved with some or no risk of being struck down if challenged in court.
Echeverria’s conclusions drew fire from Jerold Neuman, an attorney for HMS Host, who said the legal opinion did not go far enough. If more than one company carries even some risk of being struck down in court, the entire bidding process has been tainted and should be thrown out, Neuman said.
“How do you say that the process was flawed in producing these winners, but under that same flawed process you can give contracts to some of these other companies?” he asked.
Trutanich’s deputy left it up to the council panel to decide whether to proceed or start over.
If the bidding process is restarted, HMS Host would have another chance at securing some of the contracts that it is in danger of losing.
Officials for SSP and Los Angeles World Airports declined to comment because they have not seen the city attorney’s report.
Councilman Tony Cardenas, who serves as president of the Board of Referred Powers, said Trutanich’s letter showed that the search process needed extra scrutiny. “My gut told me that we needed to give the city attorney the time to review and he did, and there’s a lot of bad stuff there,” he said.
Cardenas said there is still a possibility that the board will throw out other recommendations once it reviews each company’s financial qualifications and the type of food being offered.
